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12 July 2018

Restrictions on US Exports to ZTE Relaxed

The Trump administration announced last week that U.S. companies may engage in a limited number of activities with a mainland Chinese telecommunications company hit with sanctions earlier this year in a long-running case over the company’s violation of U.S. export controls. Specifically, the U.S. Bureau of Industry and Security has authorised the following activities involving ZTE from 2 July through 1 August, subject to other provisions of the Export Administration Regulations:

engagement in any transaction necessary to maintain and support any networks or equipment (including software updates or patches) subject to contracts and agreements executed between ZTE and third parties before 15 April 2018;

engagement in transactions necessary to provide service and support, including software updates or patches, to ZTE phones (limited to models available to the public on or before 18 April);

disclosure to ZTE of information regarding security vulnerabilities in items owned, possessed or controlled by ZTE when related to the process of providing on-going security research critical to maintaining the integrity and reliability of communications networks and equipment; and

making payments to, or receiving payments from, ZTE for transactions and activities lawful pursuant to this authorisation

BIS announced in April a seven-year ban on exports to ZTE but said in June that the ban would be lifted once ZTE pays US$1 billion and places an additional US$400 million in suspended penalty money in escrow.

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